Agric. Econ. - Czech, 2018, 64(7):291-300 | DOI: 10.17221/303/2016-AGRICECON

Shadow prices of greenhouse gas emissions: An application to the Czech dairy productionOriginal Paper

Zdenka ZAKOVA KROUPOVA*, Lukas CECHURA, Michaela HAVLIKOVA, Pavlina HALOVA, Michal MALY
Department of Economics, Faculty of Economics and Management, Czech University of Life Science in Prague, Prague, Czech Republic

The paper presents an analysis of the shadow prices of the greenhouse gas emissions in the Czech dairy production industry. There is employed the stochastic frontier multiple output distance function with two market outputs and one non-market (undesirable) output - greenhouse gas emissions - as a representation of a negative public good. The results show that shadow prices differ significantly between producers. Moreover, the price is not stable over time. Significant differences can be seen in shadow prices for the greenhouse gas emissions among the researched group of farmers with respect to the degree of intensification. Most noticeably, the higher the intensification, the higher the shadow price. However, no evidence for a significant relationship between the greenhouse gas prices and technical efficiency was found, and not even the development of the greenhouse gas prices and technical efficiency suggested any common patterns.

Keywords: milk multiple output distance function, SFA, undesirable output, valuation

Published: July 31, 2018  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
ZAKOVA KROUPOVA Z, CECHURA L, HAVLIKOVA M, HALOVA P, MALY M. Shadow prices of greenhouse gas emissions: An application to the Czech dairy production. Agric. Econ. - Czech. 2018;64(7):291-300. doi: 10.17221/303/2016-AGRICECON.
Download citation

References

  1. Alvarez A., Arias C., Green W. (2004): Accounting for unobservables in production models: management and inefficiency. Economic Working Papers No. 72. Available at http://public.centrodeestudiosandaluces.es/pdfs/E200472.pdf (accessed April 9, 2016).
  2. Berre D., Boussemart J.P., Leleu H., Tillard E. (2013): Economic value of greenhouse gases and nitrogen surpluses: society vs farmers' valuation? European Journal of Operational Research, 226: 325-331. Go to original source...
  3. Bokusheva R., Kumbhakar S.C. (2014): A Distance Function Model with Good and Bad Outputs. Available at http://ageconsearch.umn.edu/bitstream/182765/2/BokushevaDistance_function_model_with_good_and_bad_outputs258_a.pdf (accessed Apr 6, 2016).
  4. Brümmer B., Glauben T., Thijssen G.J. (2002): Decomposition of productivity growth using distance functions: the case of dairy farms in three European countries. American Journal of Agricultural Economics, 84: 628-644. Go to original source...
  5. Cassey J.W., Holden N.M. (2005): Analysis of greenhouse gas emissions from the average Irish milk production system. Agricultural Systems, 86: 97-114. Go to original source...
  6. Čechura L., Hockmann H., Malý M., Žáková Kroupová Z. (2015): Comparison of technology and technical efficiency in cereal production among EU countries. Agris on-line Papers in Economics and Informatics, 7: 27-37. Go to original source...
  7. Cechura L., Grau A., Hockmann H., Levkovych I., Kroupova Z. (2017): Chatching up or falling behind in European agriculture: The case of milk production. Journal of Agricultural Economics, 68: 206-227. Go to original source...
  8. Cechura L., Hockmann H., Mala Z., Maly M. (2014): Productivity and efficiency differences between Czech and Slovak milk producers. Review of Agricultural and Applied Economics, 2: 17-21. Go to original source...
  9. Coelli T.J., Rao P.D.S., O'Donnell C.J., Battese G.E. (2005): An Introduction to Efficiency and Productivity Analysis. 2nd Ed. Springer Science, Brisbane.
  10. Dréze J., Stern N. (1990): Policy reform, shadow prices and market prices. Journal of Public Economics, 42: 1-45. Go to original source...
  11. Färe R., Grosskopf S. (1998): Shadow pricing of good and bad commodities. American Journal of Agricultural Economics, 80: 584-590. Go to original source...
  12. Fried H.O., Lovell C.A.K, Schmidt S.S. (2008): The Measurement of Productive Efficiency and Productivity Growth. 2 nd Ed. Oxford University Press, New York. Go to original source...
  13. FAO (2010): Greenhouse Gas Emissions from the Dairy Sector. Food and Agricultural Organization. Available at http://www.fao.org/docrep/012/k7930e/k7930e00.pdf (accessed May 23, 2016).
  14. Forman L., Čurda L. (2001): Význam základních a doplňkových znaků kvality mléka pro jakost mlékárenských výrobků a pro ekonomiku mlékaření. Available at http://www.agris.cz/zemedelstvi?id_a=108668 (accessed April 27, 2016).
  15. Hadley D. (1998): Estimation of Shadow Prices for Undesirable Outputs an Application to UK Dairy Farms. Available at http://ageconsearch.umn.edu/bitstream/20977/1/sphadl01.pdf (accessed May 2, 2016).
  16. Jondrow J., Lovell C.A., Materov I.S., Schmidt P. (1982): On the estimation of technical inefficiency in stochastic frontier production function model. Journal of Econometrics, 86: 1044-1057. Go to original source...
  17. Kiefer L.R., Menzel F., Bahrs E. (2015): Integration of ecosystem services into the carbon footprint of milk of South German dairy farms. Journal of Environmental Management, 152: 11-18. Go to original source... Go to PubMed...
  18. Kristensen T., Aaes O., Weisbjerg M.R. (2015): Production and environmental impact of dairy cattle production in Denmark 1900-2010. Livestock Science, 178: 306-312. Go to original source...
  19. Lee S.CH., Oh D.H., Lee J.D. (2014): A new approach to measuring shadow price: Reconciling engineering and economic perspectives. Energy Economics, 46: 66-77. Go to original source...
  20. Ross S.R., Chagunda M.G.C., Topp C.F.A. (2014): Effect of cattle genotype and feeding regime on greenhouse gas emissions intensity in high producing dairy cows. Livestock Science, 170: 158-171. Go to original source...
  21. Shephard R.W. (1970): Theory of Cost and Production. 1st Ed. Princeton University Press, Princeton.
  22. Shortall O.K, Barnes A.P. (2013): Greenhouse gas emissions and the technical efficiency of dairy farmers. Ecological Indicators, 29: 478-488. Go to original source...
  23. Squier L., Van der Tak H.G. (1995): Economic Analysis of Projects. 8 th Ed. The John Hopking University Press, Baltimore. Go to original source...
  24. Toma L., March M., Stott A.W., Roberts D.J. (2013): Environmental efficiency of alternative dairy systems: A productive efficiency approach. Journal of Dairy Science, 96: 7014-7031. Go to original source... Go to PubMed...
  25. Tsionas E.G. (2002): Stochastic frontier models with random coefficients. Journal of Applied Econometrics, 17: 127-147. Go to original source...
  26. Weiske A., Vabitsch A., Olesen J.E., Schelde K., Michel J., Friedrich R., Kaltschmitt M. (2006): Mitigation of greenhouse gas emissions in European conventional and organic dairy farming. Agriculture, Ecosystems and Environment, 112: 221-232. Go to original source...
  27. Zhang N., Choi Y. (2014): A note on the evolution of directional distance function and its development in energy and environmental studies 1997-2013. Renewable and Sustainable Energy Reviews, 33: 50-59. Go to original source...
  28. Zhou P., Zhou X., Fan L.W. (2014): On estimating shadow prices of undesirable outputs with efficiency models: A literature review. Applied Energy, 130: 799-806. Go to original source...

This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International (CC BY NC 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.